Lloyds Banking Group has given Matalan some breathing space by agreeing to change the covenants on its unused bank facilities.
The covenant change is not on a loan or Matalan’s bonds.
It is understood there was no pressure on Matalan’s debts and this remains unchanged. Matalan has a healthy liquidity position and sizeable cash balance.
Earlier this month it emerged that Matalan had entered Lloyds’ support unit for struggling businesses. This can happen for a variety of reasons, not necessarily because a business is in distress.
It came after the retailer’s online sales fell by 50.9% to £2.7m in the peak Christmas period ended January 2, while store sales fell by 6.4% to £133.8m.
Managing director Jason Hargreaves said the third quarter results were a significant improvement on the first half of the year and were achieved in a “particularly challenging market”.
Credit ratings agency Moody’s has since changed Matalan’s ratings outlook from “stable” to “negative”, amid fears it may struggle to reverse its decline in profitability.